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ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Monday, March 27, 2006 Live in New York, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening, everybody.

A historic showdown is taking place in the Senate over this nation's illegal alien crisis. A divided Senate is about to debate the most substantive immigration reform bill offered in more than two decades.

We'll be live tonight right on Capitol Hill with the very latest for you.

We'll also be live at the White House, where President Bush is making a last-minute appeal to Congress to support his controversial guest worker amnesty proposals.

And in Los Angeles, where illegal aliens and their supporters today staged new protests in support of the rights of illegal aliens in the United States, more than 10,000 students, by police estimates, took to the streets today to demand the rights and privileges reserved for citizens of the United States. We'll have more on that developing story where the protests are continuing, spilling into the freeways in certain parts of Los Angeles.

And Congressman James Sensenbrenner, he is among my guests tonight. It is his legislation calling for a crackdown on illegal aliens, illegal immigration, and a return to secure borders that has sparked these protests in cities around the country.

I'll also be talking with Hutchison Whampoa managing director John Meredith. His Hong Kong-based firm is poised to win a key United States port security contract. Critics say the contract will further weaken U.S. national security. Others say it is a beginning to providing real port security.

We'll have that discussion.

But we begin tonight with the first real debate on immigration reform in Congress since 1986, when Ronald Reagan was in the White House. The United States Senate, which has ignored this nation's illegal alien crisis for so long, is tonight finally debating immigration reform and, yes, even border security. Dana Bash is live on Capitol Hill, where senators today are already weakening tough illegal legislation that has been passed by the House. Ed Henry is live at the White House, where President Bush is pressuring Congress to pass his guest worker program. And Peter Viles is live in Los Angeles, where he will be reporting on historic protests in favor of illegal alien rights. Those riots continue at this very hour.

We begin tonight with Dana Bash on Capitol Hill -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Lou, and tonight we begin with a pretty big development with this story. The Senate Judiciary Committee, which has been working since 10:00 this morning to thread the needle, as the Judiciary chairman put it, on this issue, particularly when it comes to temporary workers, they just passed the bill out of committee which does have a provision in it, sponsored essentially by Senator John McCain of Arizona and Ted Kennedy of Massachusetts, which would give some 11 million illegal workers in the United States an eventual path to citizenship.

Now, that is a major development. It, again, was just in the Senate Judiciary Committee. That means that the full Senate will take up this issue tomorrow.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE (SINGING): We shall overcome

BASH (voice over): Protests and rage ignited by the immigration debate on full display on the streets outside the Capitol.

UNIDENTIFIED MALE: You're not an immigrant, are you?

UNIDENTIFIED FEMALE: No.

UNIDENTIFIED MALE: My parents...

UNIDENTIFIED FEMALE: My parents are immigrants.

BASH: Inside, the Senate Judiciary Committee started to slog through the most vexing and divisive question: should illegal workers be allowed to stay in the United States?

UNIDENTIFIED MALE: Green card decision...

BASH: Senators first voted to beat back a provision outraged religious leaders said would make criminals out of people who help illegal immigrants.

SEN. DICK DURBIN (D), ILLINOIS: This legislation will not make it a crime to be a good Samaritan in America.

BASH: And they approved allowing some undocumented farm workers to legally stay in the U.S. for five years.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: There could be a legal work force for agriculture, which today there is not, and we all know there is not.

BASH: The idea of a temporary worker program, which President Bush is pushing, rips apart Republicans. Supporters call it a nod to reality that illegals do jobs Americans won't do. But many conservatives call it amnesty.

UNIDENTIFIED FEMALE: Dr. Febrin (ph) does not support any form of amnesty or illegal guest worker programs.

(END VIDEOTAPE)

BASH: Now, Lou, a little bit more on the measure that just passed the Senate Judiciary Committee. It passed by a vote of 12-5. Only four Republicans voted for it. Senator Specter, the chairman, DeWine, Graham and Brownback voted with Democrats on this amendment, which essentially -- on this bill, which essentially was, again, a measure sponsored, introduced some time ago by Senator John McCain and Senator Ted Kennedy.

Now, this is -- given the vote there, only four Republicans voting in favor of it. That does put into question a bigger question, which is already a question: how this is going to fare which it comes to the Senate floor.

All day long they were discussing this issue in the Senate Judiciary Committee. And almost all the senators recognized publicly that this is just the beginning, that once this goes through the full Senate, it is going to look quite different once it comes out. And then, of course, the other big question is whether or not it could all reconcile this with the House and get this to the president's desk, especially in this election year -- Lou.

DOBBS: Let's sort some things out here, if we may, Dana. The McCain-Kennedy legislation basically providing a pathway. You're saying the guest worker program as envisioned by that legislation has passed the Judiciary Committee through amendment?

BASH: That's correct. That's essential. We don't know all the details, if it's exactly what was initially proposed by the two senators. This just happened moments ago. But that is essentially the gist of it.

DOBBS: And Dana, you said also farm workers. Now is this, in effect, the agriculture jobs bill that would -- that would provide up to a million workers, guest workers?

DOBBS: Right. Well, the actual number is 500,000 for workers, estimates, 500,000 to 800,000 with their families. Figure out the number. But that's -- and that's just happened, and I know you're going to follow this throughout.

BASH: We will.

DOBBS: Dana, thanks for bringing us up to date.

BASH: Thank you.

DOBBS: Dana Bash from Capitol Hill.

Illegal aliens and their supporters today staging more rallies in a number of cities across the country. In Los Angeles, tonight and throughout the afternoon, more than 10,000 high school students walking out of class for a second day. They marched on city hall. You're looking at live pictures of this demonstration now.

Today's protests comes two days after more than half a million people by police estimates marched in support of illegal aliens and against the Sensenbrenner border enforcement and tough crackdown on illegal aliens. That march in Los Angeles, where students today also held protests in Fresno and Dallas, Texas.

In Michigan, thousands of demonstrators marched in Detroit and Grand Rapids. There were also protests today in Washington, D.C.

We'll have a full report on all the day's protests and demonstrations in support of illegal aliens and illegal immigration coming up here in just a few minutes.

President Bush today urged the Senate to weaken tough illegal alien legislation that has been passed in the House, the Sensenbrenner legislation. President Bush today praised immigrants in this nation without making any distinction between illegal immigrants and legal immigrants, those who chose to become citizens today legally.

Ed Henry has the report.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The president chose a patriotic backdrop, a naturalization ceremony for 30 new citizens from 20 countries, to wrap his immigration plan in the American flag.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our Constitution does not limit citizenship by background or birth.

HENRY: Not so subtle prodding of fellow conservatives who are furious over the president's call for a temporary worker program to deal with the nearly 12 million illegal immigrants already in the U.S.

RON BROWNSTEIN, "LOS ANGELES TIMES": On many issues the president has governed over these last five-plus years in a way to solidify and consolidate his base. This is not one of them.

HENRY: So the president used the newly minted U.S. citizens in the room to send a signal to conservatives on Capitol Hill that he will not let illegal immigrants off the hook.

BUSH: I believe granting amnesty would be unfair because it would allow those who break the law to jump ahead of people like you all, people who play by the rules and have waited in line for citizenship.

HENRY: And the president tried to reassure conservatives who believe his plan focuses on the economic gains of cheap labor rather than the need for security.

BUSH: Congress needs to pass a comprehensive bill that secures the border, improves interior enforcement and creates a temporary worker program to strengthen our security and our economy.

(END VIDEOTAPE)

HENRY: But finding a compromise may be elusive for the president. The top Republicans privately believe Congress in the end may stalemate, which would be another legislative loss for a president desperately in need of some victories -- Lou.

DOBBS: Ed, there is no question that President Bush has at least changed his language, his rhetoric, if you will, on this, talking about no amnesty, talking even about border security. Is there any suggestion of substance behind this change in language, or is this an accommodation to a political reality that's apparent, becoming more apparent, at least, to this White House and to the -- to the Senate and as well as the House?

HENRY: Lou, it's pretty obvious there's a political reality that he has to give into, which is that conservatives in his own party on Capitol Hill are not going to go along with amnesty. He needs to clearly shift the rhetoric, he needs to take a close look at that.

And we can see in what he's saying there was almost a kinder, gentler tone trying to focus on -- at this citizenship ceremony, but also, yes, in the language he's using specifically. He's certainly trying to hit the border security issue, certainly trying to go on the record that he's not for amnesty, something that people are wondering about -- Lou.

DOBBS: People are wondering about it. I think hardly they're assuaged by his statement today. And to choose the backdrop of a naturalization ceremony where people are standing in line for months, even years, to gain citizenship to this country at a time when there is a guest worker proposal before the United States Senate Judiciary Committee perhaps may be too strong a contrast for many.

Ed Henry, thank you very much from the White House.

HENRY: Thank you.

DOBBS: There's no certainty tonight that Congress will be able to pass any kind of substantive, significant immigration reform this midterm election year. Senate leaders are bitterly divided on giving new protections to illegal aliens. They are debating dramatically different versions of immigration reform tonight.

Lisa Sylvester has that story.

(BEGIN VIDEOTAPE) LISA SYLVESTER, CNN CORRESPONDENT (voice over): Gabe, his wife and son came to the United States from Mexico on a legal visa to visit Disneyland. They never left.

UNIDENTIFIED FEMALE (through translator): I feel like an illegal immigrant, but as a criminal I have never felt.

SYLVESTER: The family settled in Georgia illegally, with Gabe working as a restaurant manager. Decisions being made in Washington could determine the family's fate and as many as 20 million other illegal aliens in the United States.

Under senators John McCain and Ted Kennedy's bill, Gabe's family would be allowed to stay and could become permanent residents after six years, and eventually apply for citizenship. Any illegal alien working in the country as of May of 2005 would receive a six-year visa that would permit them to work, travel freely, and bring their families to the United States.

Judiciary chairman Arlen Specter's latest proposal would give illegal aliens a so-called gold card, allowing them to work for six years. Those meeting certain conditions could petition to become permanent residents. The others would have to go back to their home country but could extend the work visas.

ROSEMARY JENKS, NUMBERSUSA: If you give legal status to an illegal alien, if you give them the right to be here, even if it's temporarily, you're still giving them amnesty. You're forgiving them for breaking the law.

SYLVESTER: Senator John Cornyn and Jon Kyl take a much tougher approach. Under their bill, Gabe and his family could apply for a work permit, but he and his family would have to leave the United States after five years. Legislation offered by Senate Majority Leader Bill Frist would not allow illegal aliens to stay. He offers no guest worker program, but he does increase the number of legal visas.

(END VIDEOTAPE)

SYLVESTER: All of these proposals include some type of enforcement measure. The Kennedy-McCain bill is relatively the most lenient of all them. Some these other bills are -- go a little bit further. The closest one, though, is the Cornyn-Kyl bill. That's closest to the one that passed in the House last year -- Lou.

DOBBS: Closest to the one that -- in the House, and as Dana Bash reported, the Kennedy-McCain bill is moving through, apparently, at least the Judiciary Committee, which is basically a pay for citizenship, pay as you -- as you go or come, as the saying goes.

Lisa Sylvester, thank you very much.

The sponsor of the immigration bill, Congressman James Sensenbrenner, will be our guest here, our special guest tonight. It is his legislation that has been the focus of so much attention on the part of the demonstrators and protests in a number of cities around the country.

Also, the mayor of Los Angeles isn't just speaking out in favor of amnesty for illegal aliens. What he's saying is a lot stronger than that. And we'll have what he's saying, as well as a number of others.

And some 3,000 illegal aliens will enter this country today. At least 3,000, today alone. How does that affect you and every other citizen in this country? We'll have that story next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Illegal aliens, their supporters once again tonight trying to influence the country's political process with new protests and demonstrations. The largest demonstrations have been in Los Angeles today, where illegal aliens and their supporters are demanding rights of U.S. citizenship often while flying Mexican flags.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice over): For the fourth day in a row, the Mexican flag flew in the streets of Los Angeles. Fourteen thousand schoolchildren boycotted classes, many marched on city hall, demanding equal rights for all immigrants regardless of their legal status.

UNIDENTIFIED FEMALE: Because it's unfair what they're trying to do to the Hispanics.

VILES: The Mexican flag also flew at immigration protests today on the streets of Detroit and alongside a highway in Houston. In Denver during the weekend, it was the Mexican flag and the American flag, mixed signals from immigrants demanding American rights.

UNIDENTIFIED FEMALE: I support my people, even if I am a citizen. I have to support again my background.

VILES: The biggest rally of all, downtown Los Angeles on Saturday. A crowd estimated by police at half a million strong turned out to protest the House-passed Sensenbrenner border protection bill.

UNIDENTIFIED FEMALE: I think that's the most racist bill that has ever been made. And it sucks that our government is doing this to us.

VILES: The Catholic Church has strongly encouraged opposition to the Sensenbrenner bill. And the mayor of Los Angeles has joined in, calling the bill, "illegal."

MAYOR ANTONIO VILLARAIGOSA (D), LOS ANGELES: There are no illegals here today. The only thing illegal is a proposal that would demonize and criminalize 11 million people. VILES: The rallies have been peaceful and one-sided, but Congress well knows there is another side to this debate equally passionate.

UNIDENTIFIED MALE: We belong.

UNIDENTIFIED MALE: I'm not going to get pushed off my land now by a bunch of people wanting to come over illegally. I've got no problem if they're going to come over through the port of entry legally. Welcome.

VILES: In Los Angeles, rally organizers encouraged participants to fly the American flag, and many did. But many also flew the flags of other nations.

UNIDENTIFIED MALE: Yes, Columbia.

VILES: There was even this, a Mexican flag and an American flag stitched together.

(END VIDEOTAPE)

VILES: Now, here at city hall, Lou, the crowd has dwindled a bit. It peaked at maybe 4,000. Now about 2,000 high school students still here rallying, listening to speeches. Somewhat peaceful, but there is a heavy police presence in riot gear, some of the police here.

Spoke to the police chief. He said the kids have mainly been well behaved. There have been some incidents of rock and bottle throwing, and did take a tour through the crowd and saw mainly the Mexican flag. Also the flags of Guatemala, the Salvadoran flag, and yes, a few American flags. But the Mexican flag is the flag of choice in this city on this day -- Lou.

DOBBS: When you talk -- and I know that the organizers tend to set the message for what this demonstration's about. But Pete, did you have the opportunity to talk to some of those demonstrators, get a more personal statement of what they were protesting or demonstrating against or for?

VILES: Definitely. We talked to a girl here at city hall earlier who said it's not fair just to offer the immigrants a chance to stay for a few years. They want to stay forever. They say they're doing the work that needs to be done and it's only fair that they can say, in her words, forever.

This is not really a civics argument, it's more of a passionate argument. They feel they've been here, they're doing the work, and they ought to be allowed to stay. But it is, in some senses, removed from the actual nuts and bolts of what our nation's laws are and what our immigration policy should be.

DOBBS: As you were just speaking, Pete, a young man with enthusiasm waving the Mexican flag behind you. Did you have the opportunity to ask them why they are waving a Mexican flag when they are talking about U.S. rights?

VILES: Well, not these fellows here, but we have asked others why the flag of Mexico and the flags of Guatemala and other nations. One woman told us, "Yes, I'm an American, but I have to stand up for my culture and I have to support my heritage and other people with that heritage."

Not a particularly American idea when it comes to civics and politics, but it is certainly prevailing here in Los Angeles.

DOBBS: Peter Viles, thank you very much, from Los Angeles.

In our poll tonight the question is very simple. Are you astounded that illegal aliens would demonstrate to protest the enforcement of the borders they crossed illegally to enter this country in the first place? Cast your vote at loudobbs.com. We'll have the results later here in the broadcast.

The may are on of Los Angeles, Antonio Villaraigosa, told the crowds of protesters today, "We say to Sensenbrenner, there are no illegals here today. The only thing illegal is a proposal that would demonize and criminalize 11 million people."

Last week, Senator Hillary Clinton went even further, claiming, "This bill would literally criminalize the good Samaritan and probably even Jesus himself."

Anna Burger, of the Service Employees International Union, the nation's fastest-growing service union, put it succinctly, "The Sensenbrenner bill adopted by the House is an evil bill."

Congressman James Sensenbrenner, the author of the legislation, joins us tonight from Washington.

Congressman, Mr. Chairman, chairman of the House Judiciary Committee, good to have you with us.

Just minutes ago, the Senate Judiciary Committee approved sweeping reform that -- at least elements of that reform that would strip out proposed criminal penalties for illegal aliens, also includes the president's guest worker program the agriculture jobs bill that would provide standing for at least a half a million to a million and a half agriculture workers.

What's your reaction to what's happening in the Judiciary Committee of the Senate?

REP. JAMES SENSENBRENNER (R), JUDICIARY COMMITTEE CHAIRMAN: It's appalling because the Senate Judiciary Committee is repeating the mistake that Congress made 20 years ago when it passed the Simpson- Mazzoli bill. The Simpson-Mazzoli bill granted amnesty to illegal aliens who were in the country at the time and also set up a system of employer sanctions to try to prevent employers from hiring any more illegal aliens.

Well, the employer sanctions were never enforced. The amnesty was a big flop because people were afraid of losing their job. And instead of having two million illegal aliens, we have 10 to 12 million now.

DOBBS: Ten to 12 million. And as you know, Mr. Chairman, some estimates put it as high as 20 million in this country.

Let's turn to the demonstrations you're watching all across the country here. The reaction from the services industry, the union calling this evil legislation, others saying that -- the mayor of Los Angeles saying that your legislation is illegal. The 11 million, the number he put it at of illegal aliens not illegal, or at least the number there protesting and demonstrating as we look at live pictures of some of the stragglers of the protests here today in Los Angeles.

What's your reaction to that kind of vilification?

SENSENBRENNER: Well that shows how hard it is to do anything about illegal aliens and border security. But if we don't do something effective and workable, we're going to have 20 million more illegal aliens in the next 10 years, according to a demographic study I've seen.

They'll flood our schools. Our health care system will collapse. And our social services system will end up being overtaxed. And we've got to get control of our borders because if we don't, we're going to see our economy collapse.

DOBBS: Well, that economy, we know the estimates by the most authoritative and recent study put the suppressed wages at $200 billion a year as a result of immigration, both legal and illegal. We know that the costs, the estimated costs run about $50 billion for services. And I can't tell you, Mr. Chairman, how many people have said to me, typically open border activists, activists in support of illegal aliens, saying, but we provide $7 billion in Social Security taxes every year, as if that is some sort of reasonable offset.

How are we going to cut through this, the great emotion that attends this, and get to the issue of what is border security, which one would think would be absolutely paramount in a global war on terror, and secondly, coming a rational, humane resolution of the immigration mess that we find ourselves in?

SENSENBRENNER: Well, we're not going to get to that solution if we hear responsible officials like the mayor Los Angeles making the statements that you just broadcast.

DOBBS: You didn't think he was pandering, did you, Mr. Chairman?

SENSENBRENNER: Well, he can speak for himself on whether he's pandering or not.

You know, the fact of the matter remains is that I don't want to hear anybody come and complaining about the fact that illegal aliens are flooding the school system and the hospital system and that the federal government ought to bail them out because we're trying to curtail this. And he sure is on the other side. DOBBS: It's amazing. One understands the emotion involved in this. The -- the thing that I have a difficulty understanding -- and I would love to know what your reaction is -- why there should be any debate.

It seems to me you cannot possibly -- and if anybody will defeat the logic of this syllogism, I'll be glad to step aside on the national discussion and debate on illegal immigration and border security. It seems to me straightforward.

We cannot reform immigration if we cannot control immigration. We cannot control immigration unless we can secure our borders and control those borders.

Is there something here I'm missing?

SENSENBRENNER: No, there's nothing you're missing. And what is being asked here, and apparently what the Senate Judiciary Committee has gone along with, is having illegal aliens jump to the head of the line over the legal immigrants who will have applied and done it the right way and are patiently waiting for their number to get to the top of the pile. That's not what America's all about.

DOBBS: Did you call the White House when you saw him making his statements on illegal immigration today at a ceremony of naturalized U.S. citizens?

SENSENBRENNER: Well, I was stuck at O'Hare Airport in Chicago because of a meltdown on United Airlines. But the president was at a naturalization ceremony of people who did it the legal way.

DOBBS: Yes.

SENSENBRENNER: And we shouldn't be encouraging people to do it the illegal way at a naturalization ceremony.

DOBBS: Any hope that we're going to see real border security implemented by this Congress this year? We're four and a half years since September 11. Is there any possibility that we're going to see this president, this Congress take seriously the issue of border security?

SENSENBRENNER: Well, the House of Representatives did when it passed the bill in December that all of the people are demonstrating against. And let me say, this is the most difficult thing I have done in 27 years in Congress, because the rhetoric is so emotional on both sides of the issue.

We've got to get something done. And I'm not going to have my name on a bill that ends up being counterproductive like the Simpson- Mazzoli bill was in 1986.

DOBBS: Congressman James Sensenbrenner, good to have you here.

SENSENBRENNER: Thanks, Lou.

DOBBS: Chairman of the House Judiciary Committee.

We'll be talking more as this issue continues. It looks like to dominate the politics in this midterm election year. Thank you, sir.

SENSENBRENNER: Thank you, Lou.

DOBBS: Almost a century ago, President Theodore Roosevelt expressed his beliefs about what it means to be an American. In particular, the importance of being an immigrant in this country.

Theodore Roosevelt had this to say. He said, "In the first place, we should insist that if the immigrant who comes here in good faith, becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the man's becoming in very fact an American, and nothing but an American."

"There can be no divided allegiance here. Any man who says he is an American, but something else also, isn't an American at all. We have room but for one flag, the American flag. And this excludes the red flag, which symbolizes all war against liberty and civilization just as much as it excludes any foreign flag of a nation to which we are hostile."'

"We have room for but one language here, and that is the English language. And we have room for but one sole loyalty, and that is a loyalty to the American people."

Those words uttered just about a hundred years ago. Their truths prevail in even this new century.

Still ahead here, the government doesn't know how many illegal aliens live in the United States. But we know what they cost. And that's plenty.

And outrage over the Bush administration allowing a company to secure a major port of entry contract. We'll be talking with John Meredith, of Hutchison Whampoa, the port operator in question. We'll be discussing outsourcing security and port security here next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Well, we've been reporting on these demonstrations taking part in a number of cities across the country. This is the mayor of Los Angeles. Mayor Villaraigosa. He is the gentleman, Congressman James Sensenbrenner, his legislation the subject of these protests. The mayor earlier declaring that it's illegal and there are no illegals, he said, in this city of his. Let's hear what he's got to say if we can.

We'll go back the mayor if he does have some comments. Apparently just, if you will, working through the crowd or working the crowd, depending on how you look at it. Incredibly our government doesn't know how many illegal aliens there really are in this country, nor does it know how many illegal aliens cross the border each day. Their are wide-ranging estimates. But there is something we do know with certainty about the illegal aliens living in this country. They work, for most part, very hard, most of them. They have an affect on nearly every aspect of our society and our economy. Christine Romans has the report.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Today, anywhere from 3,000 to 8,000 illegal aliens will cross the border. Most disappearing into American society. A wave of illegal immigration affecting every aspect of American life. Undercutting wages and jobs for low-skilled Americans and legal immigrants and crowding classrooms, hospitals and prisons.

Jan Ting is a former immigration official now teaching law.

JAN TING, TEMPLE LAW SCHOOL: We've really cut off the bottom rung of the economic ladder for the less-skilled, less-educated portion the American work force.

ROMANS: According to the Pew Hispanic Center, more people are now coming here illegally than through legal channels. More than half enter without a high school education, and American public schools educate their children.

The Federation for American Immigration Reform says taxpayers spend $12 billion a year on primary and secondary school education for children here illegally. Another $17 billion for the American-born children of illegal aliens, known as anchor babies.

It is federal law to provide free emergency health care to those here illegally. Congress has set aside a billion taxpayer dollars each year to reimburse all hospitals. A total, administrators complain, is a fraction of their costs.

Meanwhile, employers hire cheap labor with virtually no risk. The Government Accountability Office found only three employers fined in 2004 for illegal hiring, down from 417 in 1999.

At the same time, America's criminal justice system is bulging with these citizens of other countries. According to the Federal Bureau of Prisons, 30 percent of federal prisoners are not U.S. citizens. At a cost of $63 a day, taxpayers spend more than $3 million every day to house non-U.S. citizen dollars in our federal prisons. Most are thought to be illegal aliens.

(END VIDEOTAPE)

Up to 20 million people are in this country illegally. An incredible boon for companies, but allowing limitless illegal immigration, as this country has, is an incredible drain on so many other parts of American society. DOBBS: One of the frustrations, Christine, as you well know is people talk about how important they are to the economy and point in fact, that's a fiction. It's not important to the economy except at the barest of minimum margins. Very important, however, to those who exploit these people who come here for decent hard-working wages that are denied them in their own country, principally Mexico.

And this legislature, this Congress, this Senate, had better start dealing with this issue, honestly. Because as you can see what from what we're witnessing and reporting on here today, this is a problem that is certainly not going to go away and a crisis that's only worsening, thank you.

We're going to go to Mayor Villaraigosa in Los Angeles. He's apparently started talking to the folks.

MAYOR ANTONIO VILLARAIGOSA (D), LOS ANGELES: They've played by the rules. They've sacrificed. And now, and now that you've come to L.A., to City Hall, to register your opposition to this bill, you should know the following. The city of Los Angeles has passed a resolution two weeks ago in opposition to the Sensenbrenner legislation. I signed that resolution.

I signed that resolution. I want you to know that there are people right now all across the country that agree with you that we need immigration reform that rewards work, that gives people a pathway to citizenship. That allows families to stay together.

But I also said this. Now that you've come, it's important that you go back to school. You know what?

Mayor Villaraigosa, who was referring to the Sensenbrenner bill, as he put it, unAmerican, is finding out his audience of demonstrators, that we're told principally, they're high school students not as receptive as they might have liked to the idea that they go back to school.

We should point out that by recent Harvard University study, one half, more than half, of the Hispanic students in Los Angeles and Southern California and half of the Black students in the educational system in Southern California are dropping out of high school.

And there is horrible symbolism, at least in my opinion, that these students would be leaving their schools to demonstrate, and particularly on a day that is Cesar Chavez Day by the way, a man who fought fiercely for the rights of migrant workers and Hispanics in this country and who objected to illegal immigration with all of his heart and all of his energy, because he understood that the people who would be most victimized by it would be the very people he sought to help and that is the Hispanic community.

By the way, The Pew Hispanic Center bore out Cesar Chavez's views last year with a study that showed that of two million Hispanic illegal immigrants into this country, those who lost their jobs as a result, were the most recent Hispanic immigrants into this country. A difficult, difficult complex issue. In one that, could it seems to me, be far better represented by the elected officials, certainly in Los Angeles.

Still ahead here, I'll be talking with one woman who disagrees with almost everything I have to say about the issue of illegal immigration but she does so with intelligence and class and some great style. La Raza president and CEO, Janet Murguia will be my guest. We'll argue about what is going on in this country and what should happen.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Demonstrations that we've been reporting on here on CNN throughout the day, including to this very hour, the latest on what has become a drumbeat of protests against the Sensenbrenner bill that would crack down on illegal immigration, establish border security, and by the way, even, even punish employers who illegally hire illegal aliens.

The National Council of La Raza is the largest Latino civil rights and advocacy organization in this country, has been outspoken in opposition to this legislation. Joining me now is the head person, Janet Murguia. She's the president and CEO of the National Council of La Raza. Good to have you here.

JANET MURGUIA, PRESIDENT, NATIONAL COUNCIL OF LA RAZA: Thanks, Lou, nice to be here.

DOBBS: The Sensenbrenner legislation is sort of off focused right now, except in these demonstrations. We're watching a guest worker program move through. It looks like everybody's going to get what they want as far as the Judiciary Committee on ag workers and the hell with border security and controlling immigration. What do you think?

MURGUIA: That's not true. There's got to be...

DOBBS: ... Which part isn't true?

MURGUIA: Well enforcement and security have to be part of a comprehensive solution to this crisis that we're seeing happening right now in immigration. And the McCain-Kennedy bill, which is the focus of the Senate Judiciary Committee meeting today, really has security and enforcement measures in it. They do.

DOBBS: You and I both know ...

MURGUIA: ... They do, and we know it has to be part of it.

DOBBS: There is no way you could even talk about border security in that legislation. Secondly, it is nothing more than a pay for citizenship. I mean it is a disastrous attempt in immigration reform.

MURGUIA: That's your opinion, but the fact is...

DOBBS: It is and that's who I'm speaking for. MURGUIA: ... we've got a broad coalition that was a bipartisan vote that came out and conservatives like Sam Brownback and Senator Lindsey Graham of South Carolina, those aren't exactly your liberals, they support.

DOBBS: I don't care what they are.

MURGUIA: Well but they support the McCain-Kennedy solution on this ...

DOBBS: Well, good for them.

MURGUIA: ... in the Senate Judiciary Committee.

DOBBS: I think they're wrong-headed as they can possible be.

MURGUIA: Well the fact of the matter is, is we want to find solutions. We can all have opinions about what we think of the issue and we know it's broken, but let's focus on solutions. This is a comprehensive solution that offers security. It offers a guest worker program and it offers a way to deal with the 11-to-12 million undocumented folks who are here.

DOBBS: It gives them a chance to buy citizenship, the McCain -- and that's simply what it is. It is a guest worker program. This president talking about a guest worker program. There is no security for the borders.

And just help me out with this, Janet. Explain to me something just as simple as I can, because what you're talking about are conservatives and liberals at the far end of this debate, both as liberals and conservatives, and frankly I think there is wrong-head at both ends because they merge on this.

They're both owned by the corporate interests and the special interests in this country. The Democrats looking for votes. The Republicans looking to exploit cheap labor. There's no significant fine against illegal employers and you and I both know it. There's not another element of border security.

MURGUIA: There's a broad coalition that includes business industry, labor, the Catholic Church.

DOBBS: Here, let me give you a broad...

MURGUIA: ... No, but just a second. Give me a chance here. What we've seen is a lot of people come together and say, "We have to have -- we're a nation of laws and we're a nation of immigrants. We can be a welcoming society and we can be a society that's a lawful society."

This McCain-Kennedy bill offers the right balance that says we can have enforcement of security, but it also recognizes that we need to deal with the future flow of immigrants and this guest worker provision is not amnesty. It basically says people have to go to the end the line, pay fines and learn English and then they can qualify. And then it says we have to deal practically with the 12 million who are here. The Sensenbrenner bill doesn't do that.

DOBBS: Why are all those demonstrators out there carrying Mexican flags?

MURGUIA: Well there's a sense of pride with anybody. We just had St. Patrick's Day. Are you saying that Irish, because they're holding up their Irish flags, that all of a sudden they're not loyal or they're un-American? It's a double standard to say that people from one country can wave their flag, but people who want to be Americans can wave another flag, but they're not being loyal. That's a double standard. Irish Americans...

DOBBS: ... Are you accusing me of a double standard?

MURGUIA: Well, I'm just saying.

DOBBS: Because I want you to look me in the eye and I want you to hear me loud and clear.

MURGUIA: Yes, I'm right here.

DOBBS: OK, are you ready to listen to me loud and clear?

MURGUIA: I'm here.

DOBBS: I don't think that we should have any flag flying in this country except the flag of the United States. And let me tell you something else, since we're talking about double standards and I think you're right about people who would believe that.

But let's be clear. I don't think there should be a St. Patrick's Day. I don't care who you are. I think we ought to be celebrating what is common about this country, what we enjoy as similarities as people. And as Peter Viles was reporting, talking about the culture and the heritage of their people and that's why they want to hold up the Mexican flag or Ecuadorian flag.

MURGUIA: No, this is about the American dream, this is about the aspirations of being Americans.

DOBBS: No, let me finish. No, the American dream is being ripped out of the hands of millions of U.S. citizens today. Their jobs are being outsourced. Their schools are falling apart. Half of the Hispanics in this country are dropping out of high school, half of them, and you know that. Half of our -- young blacks are dropping out of high school.

MURGUIA: But look at the contributions. Look at the contributions that immigrants are making. They're paying federal taxes.

DOBBS: Let me given you a real piece of bad news for you. Over half of those people coming to this country illegally don't have a high school education. They're going to be a net drag on the social services of this country. We're going to be supporting them, our social safety net.

MURGUIA: They're going to provide the work force that's up to 25 percent of that work force that is contributing and sustaining the Social Security trust fund that you and many others are going to be able to benefit, $519 billion.

DOBBS: $519 billion? Janet, can I tell you right now, and I want to say this in front of God and everybody, whoever told you that illegal immigrants are going to contribute $519 billion...

MURGUIA: ... Immigrants and Hispanics.

DOBBS: Hispanics now? Now you're saying...

MURGUIA: ... I'm saying that -- you can look it...

DOBBS: .... Excuse me. Do you think that most Hispanics in this country buy this nonsense, that illegal immigration is great?

You don't think that there's a division in what Hispanics and Latinos in this country think about illegal immigration?

MURGUIA: No, I think that there are a lot of people who bring different points of view. But I think they all recognize that there's a common objective.

DOBBS: But why would you incorporate what Hispanics do?

MURGUIA: There's a common agenda here in the sense that we want to provide an opportunity to fix the broken system. It needs a comprehensive solution...

DOBBS: OK, here's a solution.

MURGUIA: ... that includes enforcement and it includes a guest worker program in dealing with those 12 million undocument.

DOBBS: Here's a solution. You tell me what's wrong it. First we secure our borders. Then we create a rational and humane immigration policy. We take control of the immigration and our borders in that order.

MURGUIA: We can do enforcement and we can make sure we're supporting some opportunities. We can walk and chew gum at the same time. We really can, we're in the 21st century, we can figure this out. We're a nation of laws and a nation with immigrations. DOBBS: Janet, I would love to say you're right, but you're watching people go on the set and say they're not talking about amnesty when they're talking about guest workers program. You're watching people sit there and say to you that they're -- please, they're equating Hispanics and illegal aliens.

MURGUIA: We have a documented report that shows in the Social Security suspension files when they look at who isn't -- they can't identify names, they look at who is contributing. Those are often immigrants without documents who are paying into the Social Security system.

DOBBS: Seven billion dollars a year, do you know what they're costing in terms of social service and suppressed wages a year.

MURGUIA: I'm just saying, they're going to see a lot of...

DOBBS: It's a quarter of a billion dollars.

MURGUIA: ... the economic vitality that we see in this country is due in large part to the immigrant work force.

MURGUIA: Let's fix the system, Lou. Let's get a solution that works...

DOBBS: ... That's right, secure the border and then we can worry about the rest.

MURGUIA: But we can secure the border and find opportunities to deal with this. If we just do enforcement only, that's what we did in 1996.

DOBBS: It's four and a half years after September 11th...

MURGUIA: And it hasn't worked.

DOBBS: ... we've got a Homeland Security Department that still can't secure a port or a border. We have got a big problem. We can't walk and chew gum, not with this government and not with this administration.

MURGUIA: And American people...

DOBBS: Janet Murguia of La Raza...

MURGUIA: (INAUDIBLE) aspire to that, I think, and we can figure this out.

DOBBS: Janet Murguia, the head of La Raza. Good to have you with us.

MURGUIA: Nice to see you here.

DOBBS: Coming up, at 7:00 Eastern here on CNN, "THE SITUATION ROOM" and Wolf Blitzer. Wolf, what have you got to say?

WOLF BLITZER, CNN ANCHOR: We've got lots going on. More of what you are reporting. Also, a self-declared al Qaeda terrorist now says his mission was to fly a plane into the White House on 9/11. But is he telling the truth?

Also, secret war memo. How far was President Bush willing to go to start a war in Iraq? There are some explosive new allegations.

And thousands taking to the streets as the fight over immigration heating up. We're covering all sides of the story, Lou, include your upcoming debate with the New Mexico Governor Bill Richardson, all right here on THE SITUATION ROOM -- Lou.

DOBBS: Thank you very much. We're looking forward to it.

And a company with ties to China -- how deep are those ties, how important -- on the verge of winning a no-bid port security contract. The head of that firm is John Meredith. He's considered by most to be one of the leaders in port security. He's part of Hutchison Port Holdings, and he will be my guest. We'll be talking about port security and his role and that of his company's. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, the Bush administration continuing to negotiate a no-bid contract that would turn some cargo screening duties in the Bahamas, specifically screening for radioactive materials, over to the Hong Kong firm Hutchison Whampoa. Joining me tonight, John Meredith. He's the group managing director of Port Holdings, a division of H.W., and it's good to have you with us. And I should say, John is considered by most in the global transportation security industry to be one of its foremost leaders and a man who is due great credit for having port security at least at the level it is now and hopefully will improve. Good to have you here.

JOHN MEREDITH, HUTCHISON WHAMPOA: Thank you, Lou.

DOBBS: You took exception to my construction last week of the idea that the United States would turn over this no-bid contract to Hutchison. Why so?

MEREDITH: Well, I want to take you back a bit, if you let me, Lou, because it's very important in the context of what we're talking about here.

DOBBS: Well, I have got four minutes, and you can do what you want, but it's your time.

MEREDITH: OK. After 9/11, we actually had two of my English colleagues that were in the building when she came down. They got out safely. It concentrated my mind and my company's mind on the need to have container security coming into the country.

DOBBS: John, that day concentrated the security of every -- the minds of everyone in this country on security, except apparently an administration that leaves borders wide open, containers still not screened for radioactivity in this country.

MEREDITH: Well, I can't talk to the administration here.

DOBBS: Four and a half years.

MEREDITH: But 52 million containers is a number that we handle around the globe from 42 ports, most of which actually come into America.

Our responsibility in my mind is to make sure those boxes come in, in a secure condition.

Three ways of doing it. One, make sure the ports overseas are secure. Two, make sure that the security of the boxes in transit is maintained. Third point, your point, is to make sure that we radiate -- radiation detection and X-ray those boxes before they get to the United States.

You can do them again when they arrive here if you wish, but we're going to try and set up systems to X-ray and radiate detection prior to arrival.

The situation in Bahamas, is it's the only port in our system which is a purely transitory port. In other words, the containers have probably already -- or should be -- already tested before they've left their origin port. They're going through a transit lounge, same as in an airport. You don't normally check transit passengers.

DOBBS: I have a question. MEREDITH: So we're not going to suggest to the government that they check them in the transit lounge. We don't ourselves check the boxes. We provide the facilities. The administration does the testing and the analysis.

DOBBS: My concern is that there will be no Border Patrol agents there. There will be no U.S. Customs there running the screening as it's now envisioned. That hadn't even -- we're told now the Nuclear Security Administration didn't even considered the...

MEREDITH: Actually, that's not the case. First of all, when you go through an airport overseas -- say, you come through Heathrow, you don't...

DOBBS: Please, I'm not talking about an airport. I'm talking about this specific no-bid contract...

MEREDITH: I'm giving the analogy. I'm giving the analogy...

DOBBS: ... with Hutchison in the Bahamas.

MEREDITH: ... of what it's like.

DOBBS: I don't want an analogy, John.

MEREDITH: No, but your viewers may want to know...

DOBBS: I respect you too much for you to do this.

MEREDITH: .. what is meant by a transit lounge.

DOBBS: Please.

MEREDITH: OK.

DOBBS: Why in the world are we 90 miles from the U.S. mainland, why are we issuing contracts and putting cargo through the Bahamas?

MEREDITH: OK. It's transit. The boxes come from across the Atlantic. They come from Latin America...

DOBBS: But why aren't they going into our ports?

MEREDITH: Only 30 percent go to the United States.

DOBBS: Why aren't they going into our ports?

MEREDITH: They're going -- ultimately destined for the United States.

DOBBS: I understand, but why are they stopping in the Bahamas?

MEREDITH: Because the shipping lanes transit their own businesses through the Bahamas. It's a transit point. And they have ships (INAUDIBLE) from Latin America, et cetera, et cetera...

DOBBS: It's got nothing to do...

MEREDITH: They make the decision to move them through the Bahamas.

DOBBS: I'm sorry, we're out of time, partner.

MEREDITH: OK, but they need to be inspected at some point in place. So they're going to be inspected in...

DOBBS: OK, I still don't think I quite...

MEREDITH: ... Bahamas by Bahamian -- by Bahamian customs.

DOBBS: So why in the world not send them into the United States ports instead of the Bahamas?

MEREDITH: They go first to the Bahamas.

DOBBS: I said why not send them to the United States ports? It's only 90 miles more.

MEREDITH: Because we need to have the U.S. ports also provide equipment...

DOBBS: John, we're flat out of time. John, I appreciate -- come back, we'll talk about it some more time. I think -- I appreciate it.

MEREDITH: Apart from which -- apart from which the U.S. Customs...

DOBBS: I have to leave, partner.

MEREDITH: ... will be in Bahamas.

DOBBS: (INAUDIBLE) vote in tonight's poll...

MEREDITH: They'll be in Bahamas.

DOBBS: Are you astounded that illegal aliens would demonstrate to protest the enforcement of the borders they crossed illegally to enter the country? Cast your vote at loudobbs.com, we'll bring the results to you right after this.

And to John Meredith, I told you, we didn't have time for history lessons. I'm sorry that you chose to use your time in that way.

The results of our poll will be coming right up. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight: 75 percent of you are astounded that illegal aliens would demonstrate to protest the enforcement of the very borders they crossed illegally to enter this country.

We thank you for being with us tonight. "THE SITUATION ROOM" starts right now with Wolf Blitzer -- Wolf.

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